Assets vs. Liabilities – How far would you be if you started out knowing the rules and principals that governed wealth accumulation?
People often ask me why I want to teach financial literacy. My response is “Have you seen the reports of the amount of debt that Americans are in? WHY NOT. It’s obvious that people need to know the differnce between an asset and a liability, and THEN they need to be taught how to purchase assets”. The difference with a person that has a wealthy mindset, is that they understand the definitions of the two AND the difference of the two. Because they understand, they then buy assets that add value to their wealth and not liabilities that they THINK are assets. One of the primary and fundamental challenges of financial bondage is just simply NOT KNOWING the difference between an asset and a liability. I teach my kids that assets put food on your table and liabilities take food off your table. Another way of putting it is that assets put money in the bank and liabilities withdraw your money out of the bank. You don’t multiply you subtracting!